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EU passes law to hold brands accountable

Companies can be fined for rights violations in Bangladesh

By Staff Correspondent

The Daily Star

April 25, 2024

Credits @FFHR.CZ

The European Parliament yesterday passed a law that holds large companies and brands responsible for human rights violations or environmental abuses in their global supply chains.

With the European Union being one of Bangladesh's top destinations for readymade garments, this law will  indirectly impact Bangladeshi manufacturers.

Once the law is enforced, a European or a foreign clothing brand can be held legally liable for labour rights violations by a readymade garment factory or environmental damage by it.

It will be able to slap hefty fines on the brands once the law gets implemented in phases from 2027.

However, the law still awaits a formal endorsement by the ministers of the European Union's member states, which is required for its full enactment.

Human Rights Watch said the ministerial vote could be held in May.

The vote coincided with the 11th anniversary of the Rana Plaza collapse, which claimed 1,134 lives. At least 29 global brands, many European, were sourcing from the garments factories housed there.

"The 11th anniversary of the Rana Plaza disaster is a somber reminder of why a due diligence law is long overdue," said Aruna Kashyap, associate director on corporate accountability at the HRW. "The European Parliament's vote sends a strong message that the EU should no longer let large corporations get away with human rights and environmental abuses."

"It is a radical change," said Lara Wolters, a member of the European Parliament and rapporteur on the first EU due diligence rules for companies, while addressing a press conference after the vote.

"The European Parliament's vote sends a strong message that the EU should no longer let large corporations get away with human rights and environmental abuses."

— Aruna Kashyap, associate director at HRW

"We are doing our bit to make sure that there are no more products in the market that come at the cost of human lives and environmental destruction.

A press release of the parliament said the law will deal with slavery, child labour, labour exploitation, biodiversity loss, pollution or destruction of natural heritage.

The law, titled "Corporate Sustainability Due Diligence Directive", will apply to EU companies and non-EU companies that generate a threshold of turnover in the EU.

The European Parliament said the implementation of the law will happen in phases.

From 2027, this law will be applicable to companies with over 5,000 employees and worldwide turnover higher than 1,500 million euros.

From 2028, this will be applicable to firms with over 3,000 employees and a 900 million euro worldwide turnover.

The other remaining companies within the scope of the thresholds defined by the law will come under this directive from 2029.

"In order for the due diligence to have a meaningful impact, it should cover human rights and environmental adverse impacts generated through the majority of the life-cycle of production, distribution, transport, storage and disposal of a product [...]," states the text of the law, which was approved on March 15, 2024, and released publicly.

The law can be used to fine violators up to 5 percent of their global turnover.

 It terms the manufacturing and trading of textiles, clothing leather, and related products "high impact" sectors.

 It states that the law aims to give those affected by the failure to respect corporate due diligence access to justice and legal remedies.

The final draft of the law states that human rights and environmental impacts might occur at the level of raw material sourcing, manufacturing, or at the level of waste disposal. It states that the impacts could be caused by the companies' own operations, operations of their subsidiaries, and their business partners.

Rights violations, or "damages caused to a person's protected legal interests" include death, physical or psychological injury, deprivation of personal liberty, loss of human dignity, or damage to a person's property.

The law also states that companies have a responsibility to ensure living wages.

Living wage is different from a minimum wage as it takes into account the minimum income required for an individual to live with dignity, as opposed to only earning enough for subsistence.

The law states, "companies should adapt business plans, overall strategies and operations, including purchasing practices, and develop and use purchase policies that contribute to living wages and incomes for their suppliers."

It said that companies are responsible for using their influence to contribute to this.

Persons affected by "adverse impacts" should have a window of five years to make the claims, said the law.

It also adds that injured parties can authorise trade unions, non-government human rights or environmental organisations to bring civil liability actions.

"Companies should develop and implement a prevention action plan," reads the text of the law.

It suggests that companies link business incentives to human rights and environmental performance.

The law also encourages companies to support SMEs who can get jeopardised or risk bankruptcy while adhering to this code of conduct with "targeted and proportionate financial support, low-interest loans, direct financing, guarantees of continued sourcing, or assistance in securing financing".

"Today's vote is a milestone for responsible business conduct and a considerable step towards ending the exploitation of people and the planet by cowboy companies. This law is a hard-fought compromise and the result of many years of tough negotiations," said Lara Wolters.


A survey was conducted by the Friedrich Naumann Foundation in Bangladesh in February 2023 to assess how compliant the RMG sector is with European laws on due diligence.

It found that child labour existed in the country's RMG supply chain even though it almost vanished from the RMG factories themselves.

"Organisation-wise analysis show employment of child workers is higher in yarn and thread manufacturing industries, followed by printing, dyeing and washing factories," said the study.

A total of 57 percent of yarn factory respondents said their organisations had child labour, while it was 31 percent for printing.

Only 51 percent of the respondents said their factories had effluent treatment plants.

Nearly 87 percent of workers in printing, dyeing, washing factories and transport workers said they cannot refuse dangerous or hazardous work like using heavy machinery or dangerous chemicals without protective equipment.

The study was done keeping in mind a separate due diligence law that was enacted in Germany in 2023.

Bakhtiar Uddin Ahmed, who has been working on the law over the last few years and is also the chief operating officer of Narayanganj-based Fakir Apparels Ltd, said compliance as per the new law will require a lot of investment to replace fossil fuel with renewable energy.

Mohammad Hatem, executive president of Bangladesh Knitwear Manufacturers and Exporters Association, said the country is almost ready for the law.

Md Towhidur Rahman, president of Bangladesh Apparels Workers Federation, however, said there were still some shortcomings in terms of preparing for this law.


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